Rich Need to Pick Up the Slack

By SAM URETSKY

Probably President Obama said it because he could afford to. Government and politics both run on money, but the debts built up in politics too often have to be paid on a government account. While the Democrats have done an impressive job of raising money through small contributions, there simply aren’t enough $5 donations to balance Sheldon Adelson’s $70 million to Republicans. So, when the President comes to visit New York on a fund raiser, you know he isn’t planning to visit the Bronx.

A second-term president is a lame duck, which offers a certain amount of freedom. It’s not unknown for a former president to run for another elective office – John Quincy Adams served in the House and Andrew Johnson in the Senate – but lately, former presidents don’t have to ask for campaign funds. On Dec. 4, the President gave a speech on Economic Mobility and inequality. He said that because of inequality, inequality of wealth, inequality of opportunity the “basic bargain at the heart of our economy has frayed.” While the economy has grown under President Obama, most of the growth has been taken by the top 0.1%. The web site inequality.org reports “Between 1979 and 2009, the top 5% of American families saw their real incomes increase 72.7%, according to Census data. Over the same period, the lowest-income fifth saw a decrease in real income of 7.4%.”

The Republicans in the House passed a bill that would cut food stamps by $40 billion over the next 10 years. This is the branch of government, we learned in elementary school, representing the people. States and cities have cut into the pensions due to retired workers. Illinois took away cost of living adjustments for retired workers, and a federal bankruptcy judge ruled that Detroit could cut benefits to already retired workers. Even President Obama had, for a while, gone over to the dark side by hinting that Social Security cost of living adjustments could be reduced. While minimum wage workers have, with public support, campaigned for an increase to the $7.25 level, business leaders and right wing commentators have opposed even a small increase. David French of the National Retail Federation said: “A minimum wage hike right now would be one more factor driving up costs for employers and creating headwinds for job creation, especially among the small businesses that create most of our nation’s new jobs.”

Meanwhile, the reality is that the very rich are neither paying their share of taxes nor spending enough of their wealth to maintain the economy. You can have an economy based on a few rich people employing the rest of us – it worked fine in the 1400s – but once you have flush toilets, you no longer need somebody to empty the buckets. The notion that money given to the wealthy would somehow work its way down has failed. According to Larry Summers (via Bloomberg) “Estate and gift taxes raised only about $14 billion last year. That’s about 1% of the $1.2 trillion passed down in America each year, mostly by the very rich.” The very rich are simply finding loopholes to keep their money, and in effect withdrawing it from circulation. When the money isn’t spent, it’s not just a headwind for job creation – it’s a total calm. If the top 1% have 35.4% of the wealth, and their only interest is to continue to accumulate wealth, it’s pulling over a third of all sales out of the economy.

Meanwhile, the rest of us are subsidizing some of America’s richest people and corporations. As long as Walmart and McDonald’s can pay salaries so low that their workers qualify for food stamps and Medicaid, all of us are helping support the corporations and their billionaire owners – even those of us who try to shop at places that pay a living wage.

Full economic reform is likely to take a while. In Britain, the Magna Carta dates from 1215, but they’re still trying to figure out what to do with the House of Lords. Still, we could take a look at the inheritance tax – the one that has been labeled the Death Tax. Truth is, it’s the fairest tax there is. The person who made the money doesn’t need it, and the person paying the tax didn’t earn it. People don’t lose a family farm as a result of inheritance taxes – the limits are set pretty high, and they could be set even higher, but there should be a limit. After you’ve inherited a billion dollars tax free, you should be willing to pay a fair percentage in taxes. Warren Buffet famously said “I don’t believe in dynastic wealth.” We shouldn’t either.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@mail.com.